Gizmodo: The US Patent System Is Killing Innovation

by Stephan Kinsella on August 17, 2011

There is a good post on Gizmodo, by Brian Barrett, arguing that “The US Patent System Is Killing Innovation.” (H/t Paul Vahur)

However, it does contain some confused analysis and prescriptions for our current patent mess. Here is the comment I left there:

The patent system ought to be abolished. I say this as a practicing patent attorney, and a pro-property rights libertarian. Patents are not property rights. They are state-granted monopoly privileges designed to permit some companies to outlaw competition. This is mercantilism.

The author’s views are a bit confused. The problem with the patent system is not that it “kills innovation.” Like all state interventions in the market, the patent system (a) violates property rights; and (b) reduces overall societal wealth. The form this destruction takes is just a detail. Sure, it results in less innovation, but then so do all other state regulations and interventions, from war to income taxes income taxes (since it reduces overall wealth, leaving less capital available for R&D, etc.).

The author is also confused in proposing “A better answer is probably to write specific language into patent law to cover the unique properties of software.” Patel is right that software is nothing special; if you allow method patents, then some software-related techniques will be patentable. There is also nothing wrong with patent trolls; if the state grants patent rights, they will be used in a variety of ways. I discuss this in Patent Trolls and Empirical Thinking; Patent Law, State Courts, and Free Speech: The Case of Troll Tracker.

The suggestion for a loser-pays rule is also misguided: “As for litigation, Gurley recommends moving to a system—similar to what the UK and France already have in place—where the losing party pays. That would, ideally, head off countless baseless suits at the pass.” As I note in Is “Loser Pays” Libertarian?, such a rule would only enhance the power of large companies suing smaller parties and add additional cost to such defendants.

The only solution is to recognize the patent system was a huge mistake and is a derogation from property rights and the free market. There is no justification whatsoever for a system of state-granted anti-competitive monopoly privileges. The current examples we are seeing on a daily basis of patent lawsuits and conflict is not just “abuse”; it is a natural consequence of such an unjust, anti-market system. People talking about “reforming” or “fixing” the system instead of getting rid of it–people who say “don’t throw the baby out with the bathwater”–are part of the problem, as they are endorsing the basic validity of the corrupt system that will always lead to injustice, economic and scientific distortion, rent-seeking, lobbying, corruption, and economic waste.

I provide more extensive arguments for why the entire patent (and copyright) system should be abolished, in various articles collected at C4SIF. See also the various studies collected in  Yet Another Study Finds Patents Do Not Encourage Innovation.

All this said, there are some reforms short of abolition that we could make, including compulory licensing. I mention them in “Reducing the Cost of IP Law”. But let’s not pretend that ANY of the current reform proposals do anything significant at all — see “Radical Patent Reform Is Not on the Way“; and Prior User Rights and Patent Reform and Patent Reform is Here! O Joy!

In my most recent speech, I discuss a lot of the problems with IP law extensively: Intellectual Property and Economic Develoment.(I left some similar comments on Niley Patel’s very confused post about software patents and patent policy.)

–Stephan Kinsella, JD, Patent Attorney, believer in the free market, opponent of state granted monopolies

[the comment seems not be coming up on Gizmodo; if anyone knows how to post it there, feel free.]

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